Wanamaker has yet to be sentenced, but the Buffalo News alludes to the possibility that Wanamaker’s plea deal is part of a larger, ongoing investigation into mismanagement and embezzlement of HUD funds at City Hall.

Stealing economic development money from a struggling city – it doesn’t get much lower than that. One wonders why CitiStat didn’t pick up all of it, and one wonders how cooperative and informative Mr. Wanamaker will be with federal investigators between now and his March sentencing.

As I report in today’s paper, a committee of mostly former City Hall insiders has been meeting since last fall to consider ways to fix City Hall’s cluster-you-know-what management of its economic development and block grant programs.

As I reported in October, the group is populated with a lot of the same folks who had a hand in creating the problems they are now being asked to fix.

The results are predicable — hire better people, get the bureaucracy working better and address the obvious problems.

In other words, blah, blah, blah.

Here is Larry Quinn’s letter in response:

City administration after city administration has failed. State government has failed. County government has failed. They have failed to address the root problems in favor of doling out patronage and – well, favors. They choose to argue over insignificant crumbs rather than band together to make actual progress or address genuine problems. Doing so would buck the status quo, and we can’t have that. To be conscientious and competent in government here in WNY is rare, and oftentimes punished.

But the same can be said of what passes for a fractured and broken “business community” here, where the predominant chamber of commerce can’t get out of its own way, and makes decisions that largely help entrenched power players. Our local chamber of commerce is so tone-deaf that it makes, arbitrary suggestions with no foundation behind them regarding reduction of the state budget, but in the next breath fights vehemently for billions in state funding for pet programs. The business leadership in this community is as insular, as parochial, as racked with self-indulgent failure as are our governments.

Of course, the two are so inextricably linked, and so driven to preserving everything just the way it is, playing a game of “it’s 1955” make-believe, that only microsurgery could separate them.

Larry Quinn’s letter is focused on one specific issue – the management of block grant programs and economic development entities in the city of Buffalo. But its message extends to the management of any and all programs funded by outside money, and to all economic development entities in Erie County. Hell, you can throw in the local old money and their foundations to that frothy cauldron of failure that regular people are saddled with here, locally.

A revolution is definitely in order around here. Not some half-assed ideological tea party revolution, because these problems far transcend party politics. A revolution where entrepreneurship is encouraged, mentored, and assisted. A revolution where entrenched interests and old money no longer control pursestrings or narratives. A revolution where government is a meritocracy rather than a deadly sludge of patronage and payback. A revolution where favoritism is no longer tolerated, and where decisions are not made based on who knows whom.

Then again, the overwhelming majority of people in this area either don’t care, or else derive a direct or indirect benefit from the current system – from the status quo. So, don’t hold your breath.

One way to get past the BERC/One Sunset fiasco would be to eliminate BERC altogether and replace it with something that smells more like a venture capital firm. A resolution to that effect was introduced by Joe Golombek

RESOLUTION

By: Mr. Golombek

Re: Eliminating The Buffalo Economic Renaissance Corp. As A Step Towards A New Approach For Economic Development

Whereas: The focus of City government should be on providing basic services such as police, fire, licenses, permits etc.; and

Whereas: Due to fiscal problems at the federal, state and local level, city government must seek to operate in a manner that is efficient and cost effective; and

Whereas: The Buffalo Economic Renaissance Corp. (BERC) with 25 employees and a budget of $4.7 million is not an efficient, cost effective or productive way to encourage economic development in Buffalo; and

Whereas: City government should not be in the economic development business, as politicians do not know how to create private sector jobs. The poor results from government sponsored economic development programs speak for themselves; and

Whereas: Eliminating BERC and leveraging its $4.7 million budget (which consists of federal and state grants) by joining forces with the private sector and the University of Buffalo, will result in more loan money being available for small businesses; and

Whereas: What is needed in Buffalo is a venture capital organization that provides financing and support to local entrepreneurs seeking to create new companies; and

Whereas: By eliminating BERC we can eliminate the cost of 25 governmental jobs and increase the amount of financing available for small businesses to create more private sector jobs; and

Whereas: Change is always difficult but Buffalo needs to reinvent its approach to economic development. We need to keep an open mind and at least consider some new ideas.

Whereas: Tweaking the operation of BERC to bring about Incremental change is not good enough. We need to completely reinvent our approach to economic development.

That this item be referred to an appropriate Committee of the Common Council to review the comments received and to possibly bring in individuals to discuss their written comments further.

______________________
Joseph Golombek, Jr.

As an added benefit, when Googling Golombek’s name to verify whether the resolution was actually introduced, I found this article, which I had previously missed, where the North District Councilman made specific recommendations for common council staff qualifications:

Meanwhile, the Council will consider changes in the way lawmakers hire staff. North Council Member Joseph Golombek Jr. is pushing for three reforms. One would impose new educational requirements on individuals who serve on the Council’s central staff. Under Golombek’s plan, the top two supervisors would need post-graduate degrees in either law or finance. All other employees in central staff, the Council’s main research arm, would need four-year college degrees. Currently, the only requirement for a Council staff job is a high school diploma, which is a standard requirement for city employment.

Golombek also wants a new rule that limits each Council member to having only two full-time staffers in district offices.

Finally, Golombek wants the Council to set up a college internship program in hopes of placing students on its staff who would come with “fresh ideas” and “outside-the-box” approaches to solving problems.

A News investigation published in 2004 found that 736 companies borrowed $153.4 million from city development agencies between 1978 and 2003, and defaulted on 22 percent of money borrowed — more than double the national average of 10 percent.

Many of those bad loans continue to haunt the city.

Buffalo has to repay the federal government for defaulted loans made under the Section 108 program out of its annual block grant allocation. This year, the agency will send $2.9 million in block grant funds back to the U.S. Department of Housing and Urban Development.

Heaney says that BERC has loaned, on average $1.37 million per year since Mayor Brown took office.

This means that HUD is the biggest beneficiary of BERC largesse by more than double.

Penman also says that a strategic plan should be developed, one that he said should go beyond the agency’s current focus on small neighborhood business to include mid-sized firms with the capacity to add jobs.

One Sunset has blown into a full-blown scandal. All that’s missing is the suffix “gate”.

In a nutshell: the city’s main economic development agency lent money to Leonard Stokes (left) when it shouldn’t have; Barron helped manage the joint; and the venture was “doomed to failure,” in the words of the report.

The audit said $90,000 of the $160,000 in public financing is unaccounted for and nearly $39,000 in inventory and furniture is MIA.

“There was an ongoing infusion of public money,” said SanFilippo. “Frankly, none of these loans should have been approved.”

The city’s Buffalo Economic Renaissance Corporation gave loan after loan after loan to a failing business that had no leadership or plan for success, and the Buffalo News’ Jim Heaney has been hammering at this story for months now. When the FBI gets involved, and the DA gets involved, you’ve got a real, genuine problem on your hands.

In a normal place, this would not bode well for the current city administration’s re-election. But Buffalo is hardly a normal place, and the scandal-plagued Mayor will most likely sail to re-election. That there is a fundamental problem with that fact is glaring, but beside the point, for now.

Not a Godwin violation

Mayor Brown deflects, using the Sergeant Schultz defense. The problem isn’t, however, whether Mayor Brown knew all of the intimate details of the BERC handouts to One Sunset, or that a BERC employee, now fired, all but managed the restaurant for a time, or that the putative owner didn’t invest what he was supposed to invest to qualify for the handouts, or that a lot of the money either got spent irresponsibly or simply disappeared.

He’s probably telling the truth. He had no idea.

But he is to blame for bringing about the environment that permits this to happen. When you operate an administration that values political considerations above merit, this kind of thing is inevitable. When you promote unqualified sycophants and political supporters to positions of fiscal power, failure will result. When your software program that’s supposed to keep an eye on efficiency is instead used for political purposes, failure will result. When people with no business experience counsel people with no business experience, failure is the only possible result. When you operate a hyper-political operation that is more concerned with obedience and politics than good policy, you’re doomed to fail.

In a macro sense, Buffalo really can’t afford this kind of thing anymore. Unfortunately, too many people are too focused on the micro aspect of how city government affects them and the economy.

Byron Brown and his administration may not have micromanaged the One Sunset deal. But they created the system that led to it. This is a gross violation of the public trust, and firing Michelle Barron is scapegoating. There’s far, far more blame to spread around.

Perhaps James the Ice Cream Bicycle Guy could apply for six figures’ worth of loans from BERC, but in smaller, less scrutinized incremental amounts, and then retain the assistance of a BERC official who’s friendly with the mayor and have her pay his bills, negotiate with vendors, and otherwise run his business while James himself flits off doing nothing. You can catch up on One Sunset with Jim Heaney.

Or maybe we don’t need that sort of excuse for “business development” and stop giving handouts to the misguided and well-connected, and start easing the path to success and growth to existing entrepreneurs.

When failures are self-inflicted, and happen with such regularity, you have to stop being apologetic or sad about it. You have to get angry.

An online petition has been set up, but frankly the travails of the ice cream bicycle guy, when juxtaposed with the too-generous handouts to One Sunset and the Mayor’s buddies, should be blown up into a massive campaign issue.